Next Orbit Ventures to accelerate $750 mn fund raising plan for investments in semi-conductor chips

Mumbai: Private equity fund Next Orbit Ventures (NOV) said it will raise $750 million, which will be invested in the electronics industry, including in a semiconductor chips manufacturing facility.  “We are launching our second fund of $750 million, which will be focused on investments in the electronics systems design and manufacturing (ESDM) segment. We aim to raise commitments of up to $300 million by March and the remainder by June 2016,” the fund’s managing partner Ajay Jalan said. Jalan said $60 million has been invested or committed from the first fund of $140 million raised two years ago. NOV has had to accelerate plans for the second fund due to an immediate opportunity to invest in one of the two consortia which have successfully bid for putting up ‘fab plant’ to manufacture semi-conductor chips. Jalan, who said he was instrumental in creating the fab manufacturing policy before launching the fund, said people with technical know-how are looking at a capital infusion on an immediate basis which interests NOV. He said NOV will invest up to $150 million from the second fund into the fab facility. A recent news report said the two consortia tasked to build the plants, led by HSMC Technologies India and the cash-starved Jaiprakash Associates, have been given four-month time to raise at least Rs 1,000 crore in four months or face cancellation of the project. Without divulging which of the two consortia has approached him, Jalan exuded confidence that NOV will be able to arrange the resources in time to avoid a cancellation. It can be noted that fab plants, which manufacture chip sets on which all personal computers including smartphones, are essential to establish the manufacturing prowess and the country has been struggling to get a plant running for over eight years now. At present, Jalan said India, one of the largest mobile telephony markets in the world, depends on imports which get reflected in the roughly $90 billion of imports per year. Stating that imported chipsets are fraught with security risks, Jalan hinted that the government may also part-invest in the fund through its Electronic Development Fund (EDF) under which it can make investments for strategic purposes. He said NOV has already received “soft commitments” from institutional investors for up to $160 million in investments and will be scouting of investments from avenues like family offices, high net individuals etc. It has already appointed bankers who are doing roadshows in US, Japan, the Middle East and Australia, he said. Jalan said the remainder of the money will be primarily invested in ancillary units surrounding the fab plant and NOV will also look at other sectors like LED, solar and Internet of things for investments. PTI